Thursday, 16 October 2008

Buy HDFC Bank, target of Rs 1435: Karvy

Karvy Stock Broking has recommended a buy rating on HDFC Bank with a target of Rs 1435 in its October 15, 2008 research report. "In FY2008-10, we expect that the bank's total business, NII and net profit would grow by 32%, 34% and 31.3% CAGR respectively. Though in FY09, there would slight strain on margin but it would still remain strong at 4.57% (around 38 bps lesser) and thereafter it would improve to 4.7% in FY10. The bank is expected to report RoAA of 1.3% and RoAE of 17%."

"We have valued the bank on DDM (dividend discount model) considering explicit projection till FY2010 and then assumed 14.2% growth during the high growth phase and thereafter 7.0% during stable growth phase. We determine the bank's intrinsic worth at Rs 1,435 per share. Based on our target price, the bank would trade at 3.2x of adjusted BVPS and 21.5x basic EPS FY2010. We rate the stock as a BUY with a target price of Rs 1,435," says Karvy Stock Broking's research report.

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.